Wednesday, March 13, 2019

This is a story of wealth and privilege, and how a public appearance last week by a man fighting a proposed Napa County environmental law ended up being surprisingly prophetic.

The federal case is so big -- 50 people were charged in six states -- that most individual details will be skimmed over. Here, I'm going to present some transcripts from conversations taped by law enforcement to show exactly what one man is accused of doing.

Agustin Francisco Huneeus, 53, president of Huneeus Vintners, was charged Tuesday in the college admissions bribery case filed by the U.S. Department of Justice.

Huneeus, charged with conspiracy to commit mail fraud and honest services mail fraud, is a very successful vintner. His father built Concha y Toro from a small winery into Chile's largest. Huneeus himself was chief executive of Constellation Brands' fine-wine division before forming Huneeus Vintners with his father in 2004. The company owns Quintessa in Napa Valley as well as Flowers in Sonoma County and Benton-Lane in Oregon.

I like Huneeus; he has a rakish charm. My wife was dismayed when she learned he had been charged; she remembers his kindness and sense of humor. And I like his company's wines. All three of its main wineries are known for the kind of high-quality balanced wines I most enjoy.

He has a problem now, though, that goes beyond the charges themselves.

More than 90 percent of people charged with a federal crime plead guilty. And the great majority of people who plead not guilty are found guilty. The federal court system is stacked against defendants, way more than state courts.

But Huneeus has good reason to fight the charges, despite the odds. If he is found guilty of a felony, he may be forced to divest himself of the wine business he has helped build. State and federal laws differ on this, and I am not a legal expert; this is a question for another day.

For today, the question is, how bad is it for a parent to try to help his kid at any cost?

The instinct is understandable. However, students without wealthy parents have to try to make it into college on their own merits. If a middle-class student wants to get into Stanford or USC but doesn't have the scores, she has to go to community college. It's not new by any means that wealthy people have workarounds for that situation. In fact, it's surprising that the federal government decided to do something about it.

Just last week Huneeus appeared before the Napa County Planning Commission to complain about a regulation under consideration that would limit construction on hillsides. He did so because, he said, he has "home sites" on the property of Quintessa in Rutherford, but new slope regulations would make them "unbuildable."

Huneeus' opening remarks to the commission are now oddly prophetic: "I have four daughters and I always have to help them with homework at night."

In fact, according to the U.S. Department of Justice, Huneeus offered more help than just that.

Huneeus is far from the best-known person to be charged in the case. Actress Felicity Huffman, TV star Lori Loughlin and fashion designer Mossimo Giannulli were also charged. William Singer, founder of a college prep business, pled guilty to federal charges and cooperated with prosecutors, which is how we know all this.

Jovan Vavic

Huneeus is specifically charged with conspiring to bribe USC associate athletic director Donna Heinel and women's water polo coach Jovan Vavic (also charged Tuesday) to recruit his daughter as a water polo player, even though she did not play water polo. As part of the scheme, one of the co-conspirators, given the pseudonym CW-2 ("cooperating witness 2), corrected Huneeus' daughter's SAT exam, giving her a score of 1380, which Huneeus later complained about.

At this point, I want to add a bit more from Huneeus' statement last week before the Planning Commission. He said, "I was terrible at geometry in high school. But as part of this ordinance I've had to go back and revisit some geometry so I thought I would share some of my findings ... which is, um, I wanted to draw it on the board, but, a 90 degree angle, OK, 100 percent slope is 45 degrees. There's a lot of confusion about that. So, a 30 degree slope is actually, sorry, a 30 percent slope is actually 16 degrees. And I think it gets confused. I think the road Mr. Morrison showed is actually 30 degrees. It is much steeper than 16 percent slope. What we are talking, a 30 degree, uh, a 30 percent slope is equivalent to a 16 degree slope, which is actually not very steep."

Confused? Huneeus was actually sort of right about what he was saying. But if he was helping me with my homework, I would need more help.

The charging document says that in early 2018, Huneeus gave a "contribution" of $50,000 to Singer's business. This came months after the cooperating witnesses arranged for a psychologist to provide a document saying Huneeus' daughter needed extended time to take the SAT. The College Board agreed to allow her to take the exam over successive days.

Huneeus arranged to have his daughter take the SAT in West Hollywood, where the test would be proctored by CW-2. CW-2 told authorities he helped her answer questions during the exam and corrected her answers after she completed it.

Huneeus' daughter got a score of 1380 out of 1600 on the SAT, putting her in the 96th percentile nationally. On Aug. 30, 2018, he complained about it to Singer on a wiretapped call:

"If you had wanted to, I mean [my daughter's] score could have been 1550, right?" Huneeus said.

"No," Singer said. "'Cause I would have got investigated for sure based on her grades."

Later in the call, Huneeus asked Singer to explain how his daughter could get into USC as a water polo player.

"I put together [your daughter's] sports profile," Singer said. "It will be a water polo profile ... I take her transcript, test scores, and profile to the senior women's athletic director, who actually is the liason for all sports at USC."

Donna Heinel

According to the transcript, associate athletic director Heinel then would present the recruit to the admissions committee.

"In the committee if they say okay good, she's in," Singer said. "Then what happens is Donna tells me she's in, we're good, and then she gets a letter from admissions, which'll say in there that she's been admitted, conditionally admitted, she needs to do her NCAA clearing house ... At that point, you will write a check for $50,000 that will ... go to Donna Heinel ... It will be made out to USC Women's Athletics ... Essentially, you've been admitted before she even has applied."

"So there's no chance I give that 50 and then she's not admitted?" Huneeus asked.

"You won't send it until you get the letter," Singer reassured.

Singer then said that when Huneeus received the final admission letter, "At that point ... my foundation will send you an invoice. You will send a $200,000 check to our foundation, you'll get your letter, thank you, with your write off, tax ID write off stuff, and then Jovan [Vavic, the water polo coach] will call me and say, 'Okay, this is how I want the money split'."

Huneeus asked if all the money went to USC.

"What Jovan usually does is, I subsidize his staff salaries," Singer said. "I put two of his staff members on my books as contractors ... And then I pay them throughout the year."

USC fired Heinel and Vavic on Tuesday after the charges were announced. Vavic has won 14 national titles, is a 15-time national coach of the year and the women's water polo team is off to a 19-0 start this season.

Huneeus said, "You understand that [my daughter] is not worthy to be on that team."

"No, no, he's my guy," Singer said of Vavic. "He knows she's not coming to play, he knows all that."

"Is there any risk that this thing blows up in my face?" Huneeus asked.

"Hasn't in 24 years," Singer said.

"I know but but the, the, the, the environment ... Like some article comes out that the, the ... polo team is selling seats into the school for 250 grand," Huneeus said.

(Self-aware! And also, 💥)

"Well, no, because she's a water polo player," Singer said.

"But she's not. I mean that's what I mean," Huneeus said.

In September, Singer told Huneeus that he needed a photo of his daughter playing water polo. The charging document says that Singer eventually sent Heinel an email that included a photograph of "another individual" playing water polo.

In October, federal investigators told Singer to call Huneeus.

"And the check of that is how much? Remind me again," Huneeus said.

"That'll be $200,000," Singer said.

"Okay. And do you need that all in one year?" Huneeus asked.

"I -- I do," Singer said

"I just want to confirm," Huneeus said later in the call. "She actually won't really be part of the water polo team, right?"

"No, no. She doesn't have to do anything," Singer said. "In late spring she's going to get a letter from the -- from athletics and adm -- and orientation. They're going to send her a letter saying this is your orientation date. What you're going to do is not pay attention to it and you're going to sign up for the first orientation date for regular students and just go to that date and from that point on you're no longer a part of athletics."

In November, Huneeus' daughter received a conditional acceptance letter, and on Nov. 19, he sent a check to Heinel for $50,000 payable to "USC Women's Athletic Board."

I like this last part. In late November, 2018, investigators told Singer to call Huneeus and tell him the IRS was auditing his foundation and would ask him about the $50,000 initial payment.

"I want to make sure is that you and I are both on the same page because what I'm going to tell them is that you made a 50K donation to my foundation for underserved kids and not that [CW-2] took the test for [your daughter]," Singer said.

"Dude, dude, what do you think, I'm a moron?" Huneeus said. Later Huneeus added, "I'm going to say that I've been inspired how you're helping underprivileged kids get into college. Totally get it."

That's a lot of transcript, but I think it helps explain that this is not a victimless crime. Underprivileged kids never have a chance in this system. Not only that, there's a girl out there somewhere who played water polo well enough to make the USC squad, but she wouldn't be able to because Huneeus' daughter took her spot. I hope she ends up at a good school anyway.

It's not clear from the charging document what happened with Huneeus' daughter; whether or not she will be able to attend USC or a different college in the fall. She is not named or charged with any crime.

I'll finish with a longer excerpt from Huneeus' three minutes of testimony before the Planning Commission (you can see the video here. Huneeus starts from 52:40 in.)

"A 30 percent slope is equivalent to a 16 degree slope, which is actually not very steep," Huneeus said. "If you looked at properties either in Marin County and San Francisco and some of those areas, it would eliminate a tremendous amount of development. None of those areas would have been developed. Not San Rafael, Mill Valley, Sausalito, big parts of San Francisco would have never been developed."

Think about that for a second. Napa County laws posited in 2019 to restrict future development, if applied in 1907, really would have restricted development in San Francisco. That's the argument a rich and powerful man made before the Planning Commission, and here's why.

"The way the laws work today is, if somebody, like me at Quintessa, has a home site on something that is over 16 degrees, um, you guys can look at it and decide whether it makes sense to build there," Huneeus said. "In my case I have home sites that don't touch the Napa River. There are different hills in between. So it would not impact water quality at all. Those home sites become kind of a little bit, become completely unbuildable. No judgment. Just unbuildable."

Usually money gets its way in the USA. In the case of a few dozen university admissions, a slight hurdle was placed Tuesday after the fact. As for the proposed Napa environmental law, that's up to the Board of Supervisors.

4 comments:

"If a middle-class student wants to get into Stanford or USC but doesn't have the scores, she [s/he] has to go to community college."

There are other four-year college options. In California:

Other private universities (e.g., Santa Clara, University of San Francisco, St. Mary's, University of the Pacific, Claremont Colleges, Occidental College, Loyola Marymount, Pepperdine, Chapman University, University of San Diego . . . and unnamed others).

UC campuses less "elite" than Berkeley and Los Angeles.

Cal State universities.

Out-of-state universities.

In-state two-year community college would be the last resort.

And if the student academically blossomed in her/his first or second undergraduate college years, s/he could apply to transfer to desired Stanford or USC as an "upper classman."

". . . The evidence shows that a college degree delivers a large and sustained income premium over a high school diploma, but a selective college doesn’t make the premium bigger. There are exceptions, but most people who prosper after graduating from such a college would likely have prospered if they had attended a less prestigious institution as well. After all, the children whose parents were charged last week were born with wealth, connections, and devoted parents willing to do almost anything for them, a recipe for success no matter where they graduate from.

. . .

"The fact that smart, ambitious children who attend elite colleges also do well in life doesn’t mean the first caused the second. This was most clearly demonstrated in a pair of now famous papers by Stacy Dale of Mathematica Policy Research and Alan Krueger of Princeton University.

"Mr. Krueger . . . and Ms. Dale linked the college application choices drawn from a survey of graduates with their earnings results from the Social Security Administration over the next two to three decades. What they found was that two students with similar backgrounds, grades and test scores who applied to the same mix of selective and nonselective schools earned about the same later on, even if the first attended a selective school and the second didn’t. The choice of schools applied to was indicative of ambition which, they argue, is a more powerful driver of success than the school they attend. 'The return to college selectivity [is] indistinguishable from zero,' they wrote in 2011."

[Let's substitute a more commonly known phrase: The return on investment (ROI) in attending a "selective" college over a "nonselective" college is indistinguishable from zero.]

"Federal officials said 53-year-old Huneeus, a San Francisco resident, paid $300,000 in bribes in an effort to have a daughter admitted to the University of Southern California under the guise of a water polo player. The allegations against Huneeus included paying bribes to have a proctor correct his daughter’s SAT exam and have an athletic official and a coach admit her as a water polo player, according to court documents.

"Altogether, about 50 people, including 30 parents, coaches and college exam administrators were arrested in March in connection with the scheme led by Newport Beach college admissions consultant William 'Rick' Singer.

"On Monday, federal prosecutors said 13 parents, including actress Felicity Huffman, have agreed plead guilty to fraud. The parents took tax deductions for their bribe payments, federal officials said. They have agreed to cooperate with the Internal Revenue Service and pay back taxes. A coach also has agreed to plead guilty, federal officials said Monday.

"Under the agreement, Huneeus will plead guilty to mail fraud before the end of the month. That date was unclear. In exchange, federal prosecutors recommend that the Napa Valley vintner be sentenced to 15 months in prison and a year of supervisory release. Huneeus also has to pay a $95,000 fine and restitution under the plea agreement. He waives his right to appeal his conviction.

"Huneeus risked 20 years behind bars without the plea, according to federal officials. He remains out of custody on $1 million bail.

"Huneeus has decided to step aside from running Napa-based Huneeus Vintners, the company announced late last month. His father, Huneeus and Quintessa founder Agustin Huneeus Sr., was appointed to represent the family’s interest in Huneeus Vintners, a company representative said last month.

"Singer, who collaborated with law enforcement, has agreed to plead guilty to multiple felonies."

Classic stories on sake

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